Supply Management — 2021

KNEC Diploma in Supply Chain Management, Module II. Original theory examination questions with explained model answers for revision.

July 2021

Paper codes: 2903/203
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

Mulima Limited has constituted a team to prepare a distribution plan for its operations. Outline five objectives that such a plan would achieve in the company.

Model answer

  1. Deliver the right goods to customers at the required place and time.
  2. Achieve the agreed service level at an economical total cost.
  3. Coordinate transport, storage, inventory and order-processing activities.
  4. Allocate distribution resources and responsibilities effectively.
  5. Provide measurable targets for monitoring delivery performance and improving operations.

Question 1(b) — 10 marks

Explain five factors that may limit the effectiveness of the intergrated logistics system of a distribution firm.

Model answer

  1. High investment cost: equipment, facilities, systems and integration may exceed available funds.
  2. Limited skills: staff may lack the technical ability to design, operate or maintain the system.
  3. Incompatible processes or infrastructure: existing layouts and technologies may not connect effectively.
  4. Resistance to change: departments or employees may oppose altered responsibilities and working methods.
  5. Uncertain operating requirements: unreliable data, variable volumes and supply disruption make system design and coordination difficult.

Question 2(a) — 10 marks

Many distribution firms have installed the integrated materials handling system in their operations. Outline five advantages of this move.

Model answer

  1. Smoother flow between receiving, storage, production and dispatch.
  2. Less duplicated handling and unnecessary movement.
  3. Higher throughput and better use of handling equipment.
  4. Improved tracking, stock accuracy and coordination.
  5. Reduced handling damage and total operating cost where the system is well designed.

Question 2(b) — 10 marks

Explain five ways in which the packaging system used by a distribution firm may enhance efficiency in selling products.

Model answer

  1. Attract attention: suitable appearance helps customers recognise and select the product.
  2. Communicate information: clear labels explain use, quantity, features and handling requirements.
  3. Protect saleable quality: good packaging reduces spoilage, breakage and customer rejection.
  4. Improve convenience: manageable pack sizes make display, carrying, opening and use easier.
  5. Support distribution: standard units and identification improve shelf replenishment, handling and order accuracy.

Question 3(a) — 10 marks

Explain five measures that user department should take in order to enhance their relationship with supply department in an organization.

Model answer

  1. Submit accurate requisitions early: clear quantities and dates allow supply to plan economical purchases.
  2. Agree specifications jointly: technical needs should be communicated without unnecessary brand restrictions.
  3. Share plans and changes: production or service revisions should reach supply promptly.
  4. Provide acceptance feedback: users should report whether deliveries meet the requirement and identify defects with evidence.
  5. Respect procedures: authorised requests and constructive communication reduce bypass buying and conflict.

Question 3(b) — 10 marks

Describe the steps that a warehouse manager should follow when devising a stores layout in a newly constructed warehouse.

Model answer

  1. Analyse requirements: identify product characteristics, stock volumes, throughput and future growth.
  2. Examine constraints: assess the building, floor loading, access, utilities, safety and handling equipment.
  3. Develop flow arrangements: position receipt, inspection, storage, picking and dispatch to minimise crossings and distance.
  4. Allocate and compare locations: assign stock zones, aisles, work areas and equipment space and test alternative layouts.
  5. Implement and review: mark locations, install facilities, train staff and measure actual flow, safety and capacity.

Question 4(a) — 10 marks

You were recently hired as an inventory controller by Ukilima International distributors. Outline five duties that you would be expected to perform in this capacity.

Model answer

  1. Maintain accurate records of receipts, issues, balances and stock locations.
  2. Review stock levels, reorder points and replenishment quantities.
  3. Conduct physical counts and investigate stock discrepancies.
  4. Monitor slow-moving, obsolete, damaged and excess inventory.
  5. Coordinate with purchasing, production and users to secure timely materials and control inventory costs.

Question 4(b) — 10 marks

Explain five negative consequences to an organization of carrying out its supply management operations without a materials plan.

Model answer

  1. Stockouts: unplanned shortages interrupt production and delay customer orders.
  2. Excess inventory: unnecessary purchases tie up cash and increase holding costs.
  3. Emergency buying: last-minute orders cause expediting and transport premiums.
  4. Poor coordination: procurement, production and finance work from conflicting requirements.
  5. Waste and obsolescence: wrong quantities or specifications lead to unusable, ageing or deteriorated materials.

Question 5(a) — 10 marks

Explain five ways in which the container packaging system may enhance efficiency of operations in a distribution firm.

Model answer

  1. Unitisation: a sealed container allows many items to move as one transport unit.
  2. Faster transfers: standard lifting arrangements reduce repeated loading and unloading of individual packages.
  3. Better protection: suitable sealed containers reduce damage, contamination and pilferage.
  4. Intermodal movement: compatible road, rail and sea equipment simplifies mode changes.
  5. Improved control: container identification and documentation support tracking and consignment accountability.

Question 5(b) — 10 marks

Highlight five ways in which a manufacturing company may enhance efficiency in its in-bound logistics operations.

Model answer

  1. Coordinate supplier deliveries with production and inventory requirements.
  2. Select dependable carriers and economical routes.
  3. Consolidate compatible loads and reduce empty or underused vehicle space.
  4. Prepare receiving capacity, staff and inspection arrangements before arrival.
  5. Share accurate order, shipment and stock information and monitor delivery performance.

Question 6(a) — 10 marks

Outline five factors that may limit the effective use of the re-order point system of inventory control in a distribution firms.

Model answer

  1. Unpredictable demand during lead time.
  2. Variable or unreliable replenishment lead times.
  3. Inaccurate or late stock records.
  4. Failure to review safety stock and reorder parameters.
  5. Supplier order constraints or disruptions that prevent timely replenishment.

Question 6(b) — 10 marks

Explain five factors that may render a physical distribution plan ineffective for use in an organization.

Model answer

  1. Unreliable demand data: inaccurate forecasts produce inappropriate capacity and stock plans.
  2. Resource shortages: limited funds, vehicles, facilities or staff restrict feasible service levels.
  3. Poor coordination: conflicting production, sales and logistics information disrupts planning.
  4. External uncertainty: traffic, weather, infrastructure failures and market changes upset assumptions.
  5. Weak information systems: limited visibility of orders, inventory and transport performance prevents realistic scheduling.

Question 7(a) — 10 marks

Kalaba limited has commissioned a consultant to develop its materials handling system. Outline five components that the consultant should include in such a system.

Model answer

  1. Handling equipment such as conveyors, trucks and lifting devices.
  2. Unit-load and packaging arrangements appropriate to the materials.
  3. Routes, aisles, transfer points and storage interfaces.
  4. Operating methods, schedules, load limits and safety procedures.
  5. People, training, maintenance and information controls needed to operate and monitor the system.

Question 7(b) — 10 marks

Explain five aspects of warehouse operations that the management may cover when assessing the performance level of its warehouse department.

Model answer

  1. Inventory accuracy: compare physical quantities and locations with stock records.
  2. Space utilisation: assess effective use of floor and cubic storage capacity without unsafe congestion.
  3. Order-processing performance: measure picking accuracy, throughput and dispatch lead time.
  4. Cost and productivity: review cost per unit handled and output per employee or equipment hour.
  5. Safety and stock protection: assess accidents, damage, theft, deterioration and compliance with storage requirements.

November 2021

Paper codes: 2903/203
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

A recent management report revealed existence of poor relationship between the supply and the finance departments at Bongo Limited. Explain five ways in which the finance department may have contributed to this situation.

Model answer

  1. Delayed supplier payments: avoidable payment delays damage supply continuity and supplier goodwill.
  2. Inadequate budget communication: withholding timely information on available funds prevents realistic procurement planning.
  3. Slow approvals: unnecessary delays in financial clearance obstruct urgent, valid purchasing requirements.
  4. Inaccurate cost or payment records: unresolved discrepancies create disputes over orders, invoices and balances.
  5. Poor consultation: changing financial procedures or targets without involving supply creates conflicting priorities and duplicated work.

Question 1(b) — 10 marks

Outline five factors that an organisation may consider when designing packaging materials for its goods.

Model answer

  1. Product weight, dimensions, fragility and preservation needs.
  2. Transport, handling and storage conditions.
  3. Required identification, safety warnings and other applicable labelling information.
  4. Customer convenience, presentation and marketing requirements.
  5. Total packaging cost, reuse, recycling and environmental implications.

Question 2(a) — 10 marks

Outline five types of costs that constitute the total costs of acquisition of goods in an organisation.

Model answer

  1. Purchase price net of appropriate trade discounts.
  2. Inbound freight and transport insurance.
  3. Non-recoverable import duties and taxes.
  4. Receiving, unloading and necessary handling costs.
  5. Inspection or preparation costs required to bring goods to the intended location and condition.

Question 2(b) — 10 marks

The management of Chama Limited intends to prepare a distribution plan for their goods. Explain five internal factors that the management may consider when carrying out the task.

Model answer

  1. Production capacity and schedules: available output limits what can be promised for dispatch.
  2. Financial resources: the budget determines affordable facilities, stock and transport capacity.
  3. Existing facilities and equipment: warehouse locations, vehicle capacity and handling resources constrain distribution choices.
  4. Staff capability: the plan must match available logistics skills and management capacity.
  5. Information and control systems: accurate orders, stock data and performance records are needed for practical scheduling and monitoring.

Question 3(a) — 10 marks

Country X has been cited by the business community as having a poor transport system. Explain five ways in which such a system may adversely affect the economy of the country.

Model answer

  1. Higher production costs: expensive and unreliable movement raises the cost of inputs and finished goods.
  2. Restricted trade: difficult access reduces market reach and export competitiveness.
  3. Loss and waste: delays increase spoilage and damage, especially for perishable products.
  4. Lower investment: businesses may avoid locations with unreliable access to suppliers and customers.
  5. Uneven development: isolated regions face fewer commercial opportunities and weaker access to services.

Question 3(b) — 10 marks

There are certain challenges that a supply manager may face when carrying out his duties in an organisation. Explain five such challenges.

Model answer

  1. Uncertain demand complicates materials and inventory planning.
  2. Supplier failure or variable lead times threaten continuity of supply.
  3. Budget shortages restrict purchasing and prompt payment.
  4. Poor internal coordination produces late requisitions and changing specifications.
  5. Weak systems, skills or ethical controls undermine accurate records and accountable decisions.

Question 4(a) — 10 marks

The management of Kanga Limited has recommended a change of packaging material initially used for a certain class of goods. Explain five reasons that may have influenced the management to make such a recommendation.

Model answer

  1. Improve protection: the current material may allow damage, leakage or deterioration.
  2. Reduce total cost: a different material may lower packaging, handling or transport expenditure.
  3. Meet changed rules: safety, labelling or environmental requirements may make the previous material unsuitable.
  4. Improve customer appeal and convenience: new needs may require easier opening, carrying or presentation.
  5. Support operational change: new transport, handling equipment or product characteristics may need a different packaging design.

Question 4(b) — 10 marks

Some organisations are reluctant to adopt the integrated supply logistics system in their operations. Explain five reasons that may account for the reluctance.

Model answer

  1. High investment cost: equipment, facilities, systems and integration may exceed available funds.
  2. Limited skills: staff may lack the technical ability to design, operate or maintain the system.
  3. Incompatible processes or infrastructure: existing layouts and technologies may not connect effectively.
  4. Resistance to change: departments or employees may oppose altered responsibilities and working methods.
  5. Uncertain operating requirements: unreliable data, variable volumes and supply disruption make system design and coordination difficult.

Question 5(a) — 10 marks

Bolo, a marketing agency has been operating without a formal distribution plan. Outline five adverse consequences to the agency from the omission.

Model answer

  1. Late or missed deliveries and unreliable customer service.
  2. Higher transport and handling costs from poorly coordinated movements.
  3. Excess stock in some locations and shortages in others.
  4. Poor utilisation of vehicles, storage space and staff.
  5. Unclear responsibilities and weak performance control, leading to complaints and lost sales.

Question 5(b) — 10 marks

A consultant engaged to design a stores layout has submitted the final plan to the management of Limbo Limited. Outline five features that such a design should possess for it to be effective.

Model answer

  1. Efficient flow: receiving, storage, picking and dispatch are arranged to minimise unnecessary movement.
  2. Effective capacity: floor and cubic space accommodate the intended stock and throughput.
  3. Accessibility: goods and equipment can reach required locations without obstructing other work.
  4. Safety and security: suitable routes, exits, load limits and controlled access protect people and stock.
  5. Flexibility: the layout can adapt to reasonable changes in volumes, products and handling methods.

Question 6(a) — 10 marks

Doloth Limited has decided to design a materials handling system for its operations. Outline five objectives that such a system should be expected to achieve in the company.

Model answer

  1. Move materials safely and reduce injuries.
  2. Minimise unnecessary movement, travel distance and handling cost.
  3. Protect materials against damage and loss.
  4. Achieve the required throughput and timely supply to users.
  5. Use available equipment, labour and storage space effectively.

Question 6(b) — 10 marks

Outline five roles that the purchasing department plays in enhancing efficiency in the stock control function of an organisation.

Model answer

  1. Provide accurate purchase-order and expected-delivery information.
  2. Obtain materials in the right quantities and at the required time.
  3. Select and develop reliable suppliers to reduce lead-time uncertainty.
  4. Coordinate order quantities and schedules with inventory controllers.
  5. Arrange returns, replacements or disposal support for defective, excess or unsuitable purchased stock.

Question 7(a) — 10 marks

Explain five advantages to an organisation that adopts the high density storage system in its warehouse operations.

Model answer

  1. More stock per unit of floor area: compact arrangements make better use of space.
  2. Lower accommodation cost: the required capacity may be achieved in a smaller building.
  3. Better cubic utilisation: suitable racking uses vertical space effectively.
  4. Reduced travel for suitable stock: concentrated storage can shorten replenishment distances.
  5. Greater capacity at an existing site: additional volume may be accommodated without moving or constructing a new warehouse.

Question 7(b) — 10 marks

Ms Jamaa was recently hired by Tuleco Limited as a materials controller. Outline five duties that she is be expected to perform in the company.

Model answer

  1. Maintain accurate records of receipts, issues, balances and stock locations.
  2. Review stock levels, reorder points and replenishment quantities.
  3. Conduct physical counts and investigate stock discrepancies.
  4. Monitor slow-moving, obsolete, damaged and excess inventory.
  5. Coordinate with purchasing, production and users to secure timely materials and control inventory costs.
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